Just in time for Labor Day, a contempt charge from a district court judge aimed at confining New Orleans Mayor Mitch Landrieu for failing to pay a long-standing and highly inflated judgment sought by the firefighters union.
It does not inspire confidence in New Orleans governance that the courts take on the role of enforcer in what is ultimately a political issue. But it’s a case that bears watching across the state, since it touches on the messy politics of public pension funds, a problem with parallels in other communities.
What is known as the “longevity” case involves $142 million in judgments and judicial interest in the lawsuit by the union against the city. Civil District Court Judge Kern Reese ruled in the union’s favor in the case involving a series of pay raises over many years that firefighters didn’t get. The raises were mandated by the state but never paid out by successive City Hall administrations.
So Landrieu is merely the latest mayor to argue that the city was being used as an ATM for the Legislature to grant raises to firefighters. The politics of New Orleans taxpayers as third-party payers, responsible for a tab they did not order, never added up for mayors for years.
So after years of legal dispute, the courts now demand that the money be paid up.
That would be a crippling financial burden for a city that has, under Landrieu’s leadership, cut waste and tackled long-standing problems.
The mayor instead proposes about a third of the inflated judgment be paid over a period of several years. Even those payments would be contingent on voters raising property taxes to pay for some of the Landrieu settlement. But the mayor also asks, in return, for reasonable changes in the firefighters’ pension plan, a contentious issue in itself.
That’s the subject of a separate lawsuit, involving another $26 million in judgments so far against the city. Benefits are generous and the system is almost broke.
We have little sympathy for a pension system that made ridiculously lousy investment decisions, losing money that should have been put in safe investments for the long term. The firefighters’ system, unfortunately, is not the only one in Louisiana that has the beneficiaries’ representatives dominating boards. A pension system for municipal police officers, not in New Orleans but elsewhere in the state, has been another poster child for investment in broken golf courses and other bad bets.
The longevity raises are a political issue that has morphed into a legal battle that the city simply could not win. And it results in a judgment that the city can’t pay.
The people of New Orleans would be the big losers if the city is forced to slash its budget for critical services — today’s firefighters and police, parks and streets and everything else. The BP settlement windfall, about $45 million, isn’t going to be the savior of the aggrieved plaintiffs in the two lawsuits.
We agree with Paul Flowers of the Business Council of New Orleans and the River Region: “All this is going into consent decrees and pension funds, and what about the rest of the city? How do we keep this economic expansion in this city going and accelerate it to the point where it could keep going for all of us?”
At the 10th anniversary of Hurricane Katrina’s landfall, the people of New Orleans and Louisiana celebrated progress since the storms. But one of the consequences of that disaster, compounded by the corrupt administration of Mayor Ray Nagin, was a city budget disaster that Landrieu inherited in 2010; desperate cuts were needed to balance the city budget.
What we simply cannot afford for the recovery is a pension system that owns a government, instead of the other way around.